NJ suit: Choice Home Warranty wouldn’t pay claims

Consumers who had paid hundreds of dollars to Edison-based Choice Home Warranty to cover their air conditioners or refrigerators found out they were on their own when they tried to get the company pay for repairs or replacements.

The state Division of Consumer Affairs has filed a lawsuit against CHW Group Inc., a company the state says enticed consumers to buy so-called comprehensive coverage for crucial home systems and appliances and then denied their claims using alleged deceptive practices.

The company advertises “home warranties” that provide “comprehensive coverage” and “peace of mind” by protecting consumers if their appliances need costly repairs or replacement, the state said. But CHW and its current and formal principals, Victor Mandalawi, Victor Hakim and David Seruya, all of Brooklyn, New York, made it hard, if not impossible to collect, authorities said in court papers.

They denied claims based on consumers’ supposed failure to properly care for their home systems or appliances or supposed pre-existing defects, the lawsuit states. In other cases, the company offered cash “buyouts” that were hundreds of dollars less the consumers’ costs to replace an appliance.

“The division alleges that Choice Home Warranty refused to provide the basic services that consumers were paying for, and pocketed the money paid by consumers,” said acting Director of Consumer Affairs Steve Lee, in a statement.

In a statement, Choice Home Warranty said it is “disappointed the state has chosen to file a lawsuit.

“We unequivocally dispute the allegations, intend to vigorously defend them, and are confident that we will ultimately prevail,” according to the statement. “Choice Home Warranty has fielded thousands of warranty claims from our customers, resulting in claims payments of tens of millions of dollars.”

The division received complaints from 116 consumers in several states, including 18 from New Jersey, seven from New York, and five from Pennsylvania. The Better Business Bureau also passed on 902 complaints from individuals in various states.

Choice Home Warranty said many of the complaints referred to by the consumer affairs division were “resolved long ago to the satisfaction of the consumer.”

The lawsuit, which alleges violations of the state Consumer Fraud Act and advertising regulations, asks a judge to order payment of restitution to consumers, void CHW’s residential service contracts and impose civil fines.